Minister for Local Government and Communities Carl Sargeant has highlighted the role credit unions can play as an alternative to pay day and other instant loan companies.
Since April 2009 credit unions in Wales have helped more than 9,000 financially excluded adults access financial services – saving them from high cost lenders.
With combined estimated assets of £27 million, the 22 credit unions providing all Wales coverage, are ideally placed to help people in communities who are unable to access mainstream financial services.
Carl Sargeant said the Welsh Government would continue to support credit unions in Wales to build their capacity to assist more people.
The Minister said,
“As ethical providers of basic financial services, credit unions play a vital role in helping the Welsh Government meet our commitments to tackle poverty and financial exclusion where it persists in our communities.
“Whilst the regulation of credit rates rests with the UK government, we do recognise the worrying increase in the number of consumers taking out high interest credit agreements, not only with doorstep lenders but now more often with payday loan companies.
“In the present economic climate where many people are already struggling to meet their credit commitments, such high interest products can only add to the growing pressure on people with reducing incomes.”
The Minister said that whilst credit union membership is increasing a recent survey conducted by Beaufort Research in behalf of the Welsh Government suggests that more people were aware of pawnbrokers and doorstep lenders that they are of credit unions.
Work is underway, including a national TV campaign, to promote credit unions in Wales so that people know that there are affordable alternatives that can help them.
He said,
“Whilst credit union membership is on the increase we must continue to get the message out that affordable alternatives to high-cost credit are available. The Welsh Government will continue to support Credit Unions in this respect.
“We are also committed over the next four years to increasing credit union membership across the public sector – making it easier for people to save and pay loans using accessible methods such as payroll deduction. In doing so, credit unions are able to attract more savers and offer affordable loans to public sector employees.
“We must continue to support and develop more responsible and affordable credit options for all consumers, whilst at the same time encouraging greater financial capability and responsibility.”
